MTN continues to demonstrate strong operational performance despite Covid-19. SA continues to be dragged down by the impact of cash accounting for Cell C – however, a Cell C recapitalisation could still occur before year-end.
The significant increase in Holdco leverage reflects the company’s vulnerability with regards to foreign-denominated debt, the translation impact of the ZAR and potential cash upstreaming difficulties. We are concerned about MTN’s exposure to the Nigerian economy which is facing multiple threats of a depressed oil price, a Covid-19 induced recession, high inflation, low forex reserves, a fiscal deficit and hard currency liquidity shortage.